Landlord Insurance – ask the experts at Perfect for Lettings
Insurance is important to protect your property and legal liabilities, and whilst premium will be a primary consideration, understanding what you are paying for will be just as important. In the event of a claim you will want to know that your policy will respond to protect you.
Most policies will include as standard protection against fire, escape of water, flood damage, explosion, theft, and legal liabilities, but are you aware of other risks you face, how your policy will protect you, and what the terms and conditions mean? The Perfect for Lettings team understand the specific risks you as a landlord face. We will go through them with you to ensure that your insurance programme meets your needs, budget, and attitude to risk.
Here are some of the most common questions landlords ask the Perfect for Lettings team about insurance for their rental properties:
Q: Does loss of rent insurance provide cover for rental defaults?
A: No, property owners often misunderstand what this important cover is (loss of rent), often confusing it with rent guarantee insurance. Whilst both protect rental income, it is the cause of the loss that differs for each type of cover.
Loss of rent
Loss of rent cover will normally be included as standard within a buildings and contents policy. It provides protection for the policyholder for loss of rent in the in the event of a claim being made on another section of the policy, such as fire, escape of water, etc. where the home becomes uninhabitable meaning you cannot collect your rent. Always check that the limit of cover provided is adequate for the maximum potential loss. Cover for alternative accommodation may be offered in addition or instead of loss of rent cover.
A fire at the home destroyed the kitchen, meaning the tenants could not live at the property for two months as it is uninhabitable. The insurer arranged for the damage to be cleared, a new kitchen was fitted, and the property was returned back to normal. The claim was settled including two month’s loss of rental income, less the policy excess.
Rent guarantee insurance
Rent guarantee insurance includes legal expenses insurance and is designed to provide protection against tenant disputes including rent arrears. This cover can be purchased as a separate policy to buildings and contents, and is a cost effective solution to protect your rental income.
Rent guarantee- the tenant falls one month in arrears. The letting agent reminds the tenant that they are overdue and the insurer receives notification of the issue and the claims process begins. The case goes to court with five months arrears and the tenant is evicted. The total claim paid is £5,250 including legal costs.
Following possession of the property, the letting agent found the tenant had left the property with damage of £5,000. This meant that the deposit of £1,177 could not be used to reduce the arrears.
Malicious damage by tenant- the landlord was left with a shortfall of £3,823. His buildings and contents policy included malicious damage by tenant. A claim was made and the insurer settled the claim less the policy excess.
Q: What is malicious damage by tenant?
A: We strongly recommend your include this cover within your insurance programme. Not all policies provide cover for malicious damage, and it does not always extend to malicious damage by the tenant. It is also useful to be aware that where cover is provided, the policy may include an ‘inner limit’ which means a cap on the amount you can claim under this section of cover.
Q: Do I insure my kitchen appliances as contents or buildings?
A: One of the most frequent questions property owners ask our team is ‘what needs to be included under the buildings sum insured, and what is defined as contents?’
Insurers provide definitions of buildings and contents within the policy wording, and your insurance advisor will advise you on this. As a general rule, anything that can be removed from the property including carpets, white goods and curtains will normally be contents. Items fixed or built in will generally be defined as buildings.
Do you have a question for Perfect for Lettings?
Please email it to the team at firstname.lastname@example.org.
Perfect for Lettings is a trading name of Saffron Insurance Services Ltd. Registered in England 829892. Authorised and regulated by the Financial Conduct Authority. Registered office: 22 High Street, Saffron Walden, Essex CB10 1AX
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